Eli Lilly & Co. has surged about 300% since its first GLP-1 was approved over four years ago, propelling it past $1 trillion in market value and making it the world's most valuable pharmaceutical company. Berenberg's Kerry Holford says the rally is just getting started, upgrading the stock to buy from hold with a new price target of $1400 implying a 21% increase. Holford cites solid growth from marketed assets and significant pipeline contribution, noting Lilly offers sales growth through to 2030 significantly ahead of peers.

The stock trades at about 26 times forward earnings, a hefty premium to peers and five of the Magnificent Seven stocks. Investor expectations for Lilly to maintain its lead in the fast-growing obesity market are high, but Holford sees further upside pending the approval of Foundayo, Lilly's GLP-1 pill to treat diabetes. The success of Zepbound and Mounjaro have allowed Lilly to invest heavily beyond obesity, bringing multiple new opportunities to the pipeline with megabuster peak sales potential.

Lilly has committed roughly $60 billion on more than 25 business development deals year-to-date, including the acquisitions of Centessa Pharmaceuticals for as much as $7.8 billion and Kelonia Therapeutics for up to $7 billion, as well as Atai Beckley for $3.8 billion. Holford believes this non-obesity pipeline is underappreciated by investors.